Fed Cuts Rates – Recession Coming – Huge Opportunity
Posted on January 22nd, 2008 by Marc Chase Posted in Industry News | 15 CommentsFor those of you who know my background - know that I’ve pretty much had two careers.
From 1988 until 2000 I worked in the investment and financial planning industry. From 2000 on, I’ve been right here harassing the credit bureaus.
Today, I wanted to dust off my economic hat and talk about the economy. There are some economic trends I haven’t seen in a long time (if ever), including big time opportunities.
The Bad News…
Our economy is in serious trouble.
The fed cut rates by ¾’s of a point in between meetings. That is a big move and I’m willing to bet they cut by another half point next week.
Here’s what it means to you.
The market has dropped 18 percent and this is the biggest rate cut since 9/11. If that doesn’t tell you something is seriously wrong, I don’t know what does.
But there’s a factor most people don’t think about and should; Baby boomers. They’ve started retiring and that is a ton of money being pulled out of the economy. Their spending days are over and it’s going to have a significant impact on the economy.
I won’t get into this too much, but it’s real and it’s serious. For more information, I highly recommend The Great Boom Ahead by Harry S. Dent.
The Good News: The Streets are filled with blood.
There’s a saying in the investment industry that goes like this…
“Buy when there’s blood in the street” simply put, buy low! Well, the streets are bloody!
While the economy isn't looking that great, there are some opportunities that you may never see again. If you’ve ever thought about improving your credit score so you can purchase or refi, now is the time.
Home Loan Opportunities:
If you have the credit to do it, take advantage of these huge cuts and move from a variable rate to a 30 year fixed rate.
You might also consider moving to a larger property and keep your payments the same as they are now.
Both home prices and mortgage rates are low – lots of investment opportunity.
Debt Reducing Opportunities:
This is also a great chance to reduce your debt. These rate cuts will affect credit card rates as well.
If you’re in high interest rate cards and have the credit score to do it, get new, lower rate credit cards and transfer the balances. This move could save you hundreds of dollars in monthly payments.
Bad Credit Opportunities:
If you have bad credit , this could be your second chance. Typically changes like this take at least 6 months to really work their way through the economy.
If your credit has suffered lately, you have plenty of time to fix your credit so that you too may benefit from these rare opportunities.
The Not so obvious victims:
There is another victim of all this that we may not think about…our pets.
Thousands of pets have been put into shelters because their owners have lost their homes and were unable to take them.
If you have the means, please donate to animal shelters – they need your help.
I can honestly say that this might be one of the most opportunistic set of circumstances that I’ve ever seen, and may never see again.
If you want to learn more about how you can take advantage of these rare opportunities, contact us for a free strategy consultation.
Very informative article.Thanks for this.
You’re very welcome - glad you liked it
I need to move to a fixed rate so badly. I should kick myself for not doing it already. Thanks for the useful article pal.
:O)
Hey Cajun, You’re welcome and dont worry, you have plenty of time. Market has a little settling to do and if you’re thinking about it now…you’re timing is probably perfect.
I agree completely! Now is the time to start buying investments that are dropping in value. Most importantly, don’t sell any that you have and don’t lower your monthly spend on investments. By the time it all turns around you’ll own a lot more than you would have if it had not fallen!
Great article Mark , I love That at least someone is telling the truth.
Well thank you Franklin…glad you enjoyed
Florida looks to be a bargain if you’re looking for a home. Seriously, it’s a great idea to lock in rates at a much lower level, even if you incur some penalties. You’ll still save a lot of interest payments down the road. Great article!
Hi, thanks for the article. It’s a wake up call to many. At what point do you think it is wise to refinance a mortgage? I have a 30 year fixed at 6.875%. I heard they can be had for 5.9% now. Not sure if that’s true, but if you could point me in the right direction of a general guideline, I’d greatly appreciate it. Thanks.
Right now is a really good time and yes you are right, consumers are able to re-finance into better rates. Obviously there are many variables, i.e current credit score, full doc or stated, LTV’s etc. e-mail me to further discuss if you would like.
Great information. Thank you for all of the advice.
-Jon
Obviously, the rates were growing too high. But as for now its good time for investment. People can finance again and can make more investment if proper guidence is given.
I don’t think this right time to invest as due to U.S. recession.
I wonder how long it is going to take all of these cuts to trickle through the economy. Kind of scary to think that the Fed may have to raise interest rates in the future as fast as they had to cut.
Even the luxury market is beginning to feel the pinch. What next? Zero interest? And if so, how come it’s still so expensive to borrow money?